Recent regulatory developments of interest to insurers and their intermediaries. Includes updates from the UK FCA and EIOPA. See also our General regulatory news in the Related Materials links.

Contents

• COVID-19: FCA updates webpage on BI insurance test case
• Signposting of travel insurance for people with serious pre-existing medical conditions: FCA update
• IDD product oversight and governance requirements: EIOPA report on approach to supervision
• Solvency II: EIOPA consults on draft opinion on supervising use of climate change risk scenarios in ORSA

COVID-19: FCA updates webpage on BI insurance test case

The UK Financial Conduct Authority (FCA) has updated its webpage on its business interruption (BI) insurance test case, publishing a draft transcript of the consequentials hearing on 2 October 2020.

The FCA also states that Lord Justice Flaux and Mr Justice Butcher have made various orders that are consequential upon their judgment in the test case, including a series of declarations as to the effect of the judgment, which the FCA will publish as soon as they are available.

The FCA will review the final declarations and decide on its next steps. These include continuing the application to appeal to the Supreme Court while continuing discussions with insurers and action groups to find a solution that avoids the need for appeal and enables pay-outs on eligible claims as quickly as possible.

The High Court has granted "leapfrog" certificates for an appeal to the Supreme Court to:

• the FCA;
• Arch Insurance (UK) Ltd;
• Argenta Syndicate Management Ltd;
• MS Amlin Underwriting Ltd;
• Hiscox Insurance Company Ltd;
• QBE UK Ltd;
• Royal & Sun Alliance Insurance plc; and
• Hiscox Action Group.

These parties are now entitled to apply to the Supreme Court for permission to appeal.

The FCA states that Ecclesiastical Insurance Office plc withdrew its leapfrog application before the hearing and the court rejected an application by QIC Europe Ltd to become a party to the test case in order to bring an appeal.

Signposting of travel insurance for people with serious pre-existing medical conditions: FCA update

The FCA has updated its webpage on policy statement, PS20/3, to announce that the Money and Pensions Service (MaPS) has launched a travel insurance directory on its Money Advice Service website for people with serious pre-existing medical conditions. The directory meets the FCA's criteria for a "medical cover firm directory".

Therefore, the FCA requires that all firms that offer retail travel insurance must include details of the MaPS directory on their websites within 30 days of 8 October 2020. This is to ensure that consumers will have access to the directory, ahead of the introduction of the signposting requirement from 26 April 2021. Should the FCA confirm that other directories meet its criteria, firms will be able to list details of any of these directories.

IDD product oversight and governance requirements: EIOPA report on approach to supervision

The European Insurance and Occupational Pensions Authority (EIOPA) has published a report on its approach to the supervision of product oversight and governance (POG) requirements under the Insurance Distribution Directive (IDD). The report aims to give insurance manufacturers and distributors more clarity on the supervisory approach to POG requirements and to support them when they implement their own POG policies, so they can better engage with their supervisors.

EIOPA states that the document is for information purposes only and is not binding on either national competent authorities or insurance distributors and insurance manufacturers. It does not amend or form part of the IDD or Commission Delegated Regulation (EU) 2017/2358.

Solvency II: EIOPA consults on draft opinion on supervising use of climate change risk scenarios in ORSA

EIOPA has published a consultation paper on a draft opinion on supervising the use of climate change risk scenarios in the own risk and solvency assessment (ORSA). The opinion is addressed to national competent authorities and aims to enhance supervisory convergence in supervising the use of climate change risk scenarios in ORSA, applying a risk-based and proportionate approach.

The consultation follows on from EIOPA's opinion on sustainability within Solvency II, which was published in September 2019. The opinion recommended that (re)insurers consider climate risks beyond the one-year time horizon through the system of governance, risk-management system and their ORSA. EIOPA considered that further work would be needed to define a consistent set of quantitative parameters, which could be used in climate change-related scenarios. Undertakings could then adopt as appropriate in their ORSA, risk management and governance practices, also recognising that other parameters will depend on the specificities of each undertaking.

The consultation closes on 5 January 2021. EIOPA intends to publish the final opinion in spring 2021, together with a feedback statement on responses to the consultation.

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